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bucheon bum
Joined: 16 Jan 2003
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 Posted: Fri Feb 27, 2009 12:06 pm Post subject: US gov't gives more money to Citigroup |
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Article
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| On Friday February 27th Citigroup and the Treasury reached a deal that took a big step towards what would in essence be partial nationalisation. Through conversions of preferred stock the government will end up with up to 36% of Citi, though the final figure will depend on how many preferred shares private holders agree to swap. |
Uggh. Let it go under already. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Fri Feb 27, 2009 12:14 pm Post subject: |
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| Citi's market cap is 13b. The US government bought 40% of that for 25b. WTF. |
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RJjr
Joined: 17 Aug 2006
Location: Turning on a Lamp
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| Posted: Fri Feb 27, 2009 5:19 pm Post subject: |
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| Does that mean we're responsible for 40% of Shiti Bank's liabilities? |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Sat Feb 28, 2009 8:23 am Post subject: |
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| RJjr wrote: |
| Does that mean we're responsible for 40% of Shiti Bank's liabilities? |
It really means that the American taxpayer is responsible for all of shiti banks liabilities. |
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bucheon bum
Joined: 16 Jan 2003
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| Posted: Sun Mar 01, 2009 8:27 pm Post subject: |
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And now the US gov't is offering $30 billion to AIG.
Adam Smith is rolling over in his grave.
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| The intervention would be the fourth time that the United States has had to step in to help A.I.G., the giant insurer, avert bankruptcy. The government already owns nearly 80 percent of the insurer�s holding company as a result of the earlier interventions, which included a $60 billion loan, a $40 billion purchase of preferred shares and $50 billion to soak up the company�s toxic assets. |
Nationalization anyone? |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Sun Mar 01, 2009 8:36 pm Post subject: |
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| bucheon bum wrote: |
And now the US gov't is offering $30 billion to AIG.
Adam Smith is rolling over in his grave.
| Quote: |
| The intervention would be the fourth time that the United States has had to step in to help A.I.G., the giant insurer, avert bankruptcy. The government already owns nearly 80 percent of the insurer�s holding company as a result of the earlier interventions, which included a $60 billion loan, a $40 billion purchase of preferred shares and $50 billion to soak up the company�s toxic assets. |
Nationalization anyone? |
AIG offers little to nationalize.. It is a big black hole. 280b of 'government' money in already.
There is really no reason to keep this company afloat.
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| Goldman Sachs Group Inc., Societe Generale SA, Deutsche Bank AG and Merrill Lynch & Co. are among the largest banks that bought swaps from AIG, according to a person familiar with the situation. The insurer handed over about $18.7 billion to financial firms in the three weeks after the September bailout, said the person, who declined to be named because the information hasn�t been made public. |
http://www.nakedcapitalism.com/2009/03/black-hole-alert-aig-to-get-as-much-as.html
Oh. |
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Gopher
Joined: 04 Jun 2005
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| Posted: Sun Mar 01, 2009 8:36 pm Post subject: |
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| Is this qualitatively different than New-Deal-era interventionism? |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Sun Mar 01, 2009 8:38 pm Post subject: |
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| Gopher wrote: |
| Is this qualitatively different than New-Deal-era interventionism? |
I don't think we've really seen the interventionism yet. This is more like a stop-gap..
The article I posted above suggests what meaningful interventions are possible in the current situation.
I have tried, hard, to understand the CDS market that blew up AIG. I've talked with guys who should know them well (trade in them), I've read books that reference them a great deal and I am honestly no further ahead. The number of contracts outstanding are in the tens of trillions, which I can't even fathom. I have no idea what the effects of the CDS market collapsing are. The AIG thing may be a reasonable 'to big to fail' bet. I really have no idea. Naked Capitalism says that AIG wrote CDS contracts naked (meaning AIG had no relationship with the asset being insured) which sounds like fraud to me. Naked short selling is illegal, though this law is not often enforced and may be the crime of the century. It it is illegal to sell an asset without holding it then I assume AIG was in very dirty water.
http://www.financialsense.com/metals/crime/main.html |
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bucheon bum
Joined: 16 Jan 2003
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| Posted: Sun Mar 01, 2009 9:50 pm Post subject: |
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| mises wrote: |
| bucheon bum wrote: |
And now the US gov't is offering $30 billion to AIG.
Adam Smith is rolling over in his grave.
| Quote: |
| The intervention would be the fourth time that the United States has had to step in to help A.I.G., the giant insurer, avert bankruptcy. The government already owns nearly 80 percent of the insurer�s holding company as a result of the earlier interventions, which included a $60 billion loan, a $40 billion purchase of preferred shares and $50 billion to soak up the company�s toxic assets. |
Nationalization anyone? |
AIG offers little to nationalize.. It is a big black hole. 280b of 'government' money in already.
There is really no reason to keep this company afloat.
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Ha, it was more of a statement than anything else. Certainly not a suggestion. I agree, there is no reason to keep it afloat. More billions adios. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Mon Mar 02, 2009 1:36 pm Post subject: |
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| Singaporeans are piiissseedd about the haircut on equity their sovereign wealth fund has been forced to take. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Mon Mar 02, 2009 9:44 pm Post subject: |
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http://singabloodypore.rsfblog.org/archive/2009/03/02/the-rape-of-singapore.html
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From Getting at the Truth
1318049675.jpg
Uncle Sam - "Pay up or else!"
As we correctly predicted, the U.S. is beginning to call in its markers.
If you read the fine print on the U.S. conversion of its Citigroup debt to ordinary shares in the company, you could have predicted it too.
Here�s the fine print:
The U.S. said it will convert its stake in Citigroup to the extent that Citigroup can persuade private investors, including several big foreign government investment funds, to do so.
The U.S. Treasury Department will match the private investors� conversions dollar-for-dollar.
The arms have been twisted successfully, and the U.S. will convert 25 billion dollars of capital into Citigroup ordinary shares.
So whose arm got twisted?
We don�t know all of the victims, but Singapore�s GIC was, most likely, the largest.
Singapore will convert its preferred notes, which yielded 7%, to ordinary shares. Singapore will do this at a price of $3.25 a share below the conversion price of $26.35 as agreed when it invested in the preference notes.
This means Singapore is paying $3.25 a share for Citigroup, and giving up their 7% yield of $482 million a year for no yield at all!
Friday, on the NYSE, Citigroup plunged to $1.50 a share.
Let�s do the math. Singapore is paying $3.25 a share for shares worth $1.50. Singapore is paying doubles (2.17 times to be exact) the going price for Citigroup shares.
That dilutes Singapore�s initial investment in Citigroup for the original $6.88 billion to $3.17 billion - a loss for Singapore of $3.71 billion.
Lee Kuan Yew, Singapore�s de facto ruler, has said that Citibank has an excellent franchise, and that Singapore has invested for the long term - 20 or 30 years - far beyond his life expectancy. |
If you invest in a company, and it goes broke, you will have zero investment left. That is capitalism. |
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